The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

The accompanying notes are an integral part of these consolidated financial statements.

5

PACIFIC WEBWORKS, INC. & SUBSIDIARIES

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

 (Unaudited)

NOTE 12 – BASIS OF FINANCIAL STATEMENT PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the U. S. Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations.  The information furnished in the interim condensed consolidated financial statements includes normal recurring adjustments and reflects all adjustments, which, in the opinion of management, are necessary for a fair presentation of such financial statements.  Although management believes the disclosures and information presented adequately ensure that the information is not misleading, it is suggested that these interim condensed consolidated financial statements be read in conjunction with the Company’s December 31, 2016 audited financial statements and notes thereto included in its December 31, 2014 Annual Report on Form 10-K.  Operating results for the nine month period ending September 30, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015.thereto.  

Reclassifications

Certain prior period balances have been reclassified to conform to current period presentation.

NOTE 2 – NOTES PAYABLE

On August 28, 2013 the Company entered into a $42,738 financing agreement for payment of its business insurance.  The financing agreement carries a 5.24% annual rate of interest and requires the Company to make 10 monthly payments of $4,377.  During the three month period ended September 30, 2014, the Company made principal payments of $12,821 and interest of $310.  For the nine month period ended September 30, 2014, the Company made principal payments of $25,642 and interest of $620. The note has been paid in full.

On September 2, 2014 the Company entered into a $44,281 financing agreement for payment of its business insurance.  The financing agreement carries a 5.24% annual rate of interest and requires the Company to make 9 monthly payments of $5,028. During the three month period ended September 30, 2015, the Company made principal payments of $0 and interest of $0.  For the nine month period ended September 30, 2015, the Company made principal payments of $24,601 and interest of $540. The note had been paid in full.

On August 26, 2015 the Company entered into a $77,411 financing agreement for payment of its business insurance.  The financing agreement carries a 5.65% annual rate of interest and requires the Company to make 11 monthly payments of $7,237. During the three month period ended September 30, 2015, the Company made principal payments of $7,037 and interest of $200.  For the nine month period ended September 30, 2015, the Company made principal payments of $7,037 and interest of $200.

NOTE 3 – NOTES RECEIVABLEGOING CONCERN

On August 3, 2011,The Company’s consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.  The Company filed bankruptcy in February 2016 and in December of 2016 all assets and liabilities of the Company through its World Commerce Network, LLC subsidiary, issuedwere transferred to the Liquidating Trust.  Furthermore, the Company has an accumulated deficit of $18,119,429 as of June 30, 2017.  These factors, among others, raise substantial doubt about the Company’s ability to continue as a $250,000 promissory notegoing concern.    

Management’s plans to Bryan Development, LLC,continue as a Utah limited liability company, for usegoing concern include seeking a merger or an acquisition with a larger, better capitalized entity that will benefit current shareholders, however, as working capital in its business investment activities.  On December 31, 2012, the maturity date of the promissory note was extendeddate hereof, we have not identified any potential merger or acquisition partner.  Because the Company has no capital with which to December 31, 2013, on December 31, 2013,pay current expenses the maturity date ofCompany’s sole officer and director has agreed to pay these charges with his personal funds, as interest free loans to the promissory note was extended to June 30, 2014 and on June 30, 2014 the maturity date of theCompany or as capital contributions.

6

PACIFIC WEBWORKS, INC. & SUBSIDIARIES

NotesManagement cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to the Consolidated Financial Statements

September 30, 2015 and 2014

 (Unaudited)

NOTE 3 – NOTES RECEIVABLE (CONTINUED)

promissory note was extended to August 31, 2015. As of December 31, 2014, the promissory note was repaid in full.

On August 15, 2011, Headlamp Ventures established a revolving line of credit facility and issued an initial $400,000 promissory note to Grupo Zapata Arce, a division of Metales y Minerales S.A. De C.V., a corporation organized under the laws of Mexico, for use in its iron ore exporting business.  Interest is charged on amounts outstanding in the form of a fee of $3.00 per metric ton of iron ore purchased with proceeds of the note.  On September 20, 2011, Grupo Zapata Arce Division Metales y Minerals S.A. de C.V., LLC was addedcontinue as a party to the revolving line of credit and promissory note originally established on August 15, 2011 for Grupo Zapata Arce.  Grupo Zapata Arce is positioned in an industry experiencing resurgent demand that is especially driven by emerging markets around the world. However, as of August 31, 2013 Grupo Zapata Arce is in default under the promissory note and Headlamp Ventures has initiated legal action to collect the amount due.  (See Note 5 – Litigation Matters, below.)going concern.

NOTE 4 – COMMITMENTS & CONTINGENCIES

During the year ended December 31, 2013, the Company entered into a lease agreement for commercial office space.  The lease runs through May 31, 2018 and provides for monthly payments of $4,300 in year one, $4,425 in year two, $4,550 in year three, $4,700 in year four and $4,825 in year five. A security deposit in the amount of $4,825 was required upon lease execution.

NOTE 5 – LITIGATION MATTERSDISCONTINUED OPERATIONS

On September 6, 2013, our subsidiary, Headlamp Ventures, LLC, filed a complaint against Marc Didier in the Third District Court Salt Lake County State of Utah.  The complaint alleges that Headlamp Ventures loaned Grupo Zapata Arce (“Zapata”) $400,000 and Mr. Didier guaranteed the Loan Agreement and Note.  Zapata failed to repay the loan by the due date of August 31, 2013 and is in default.  Pursuant to the Guaranty and Security Agreement, Mr. Didier is obligated for all amounts due and owing.  Headlamp Ventures seeks repayment of the loan amount, plus interest, attorneys’ fees and punitive damages. In June, 2015,February 23, 2016 the Company filed a motionvoluntary petition for Summary Judgmentbankruptcy in the U.S. Bankruptcy Court for the District of Utah, and soon afterwards ceased its business activities. On August 19, 2016 the Company proposed a Plan of Liquidation and on July 14, 2015,November 28, 2016 the Court granted that motion inentered an order confirming the amountPlan of $546,798.  The judgment bears interest atLiquidation and establishing a rate of 15% per annum until paid in full.Liquidating Trust. On August 4, 2015, Mr. Didier filed a Chapter 7 Bankruptcy case.

On November 15, 2013 Pacific WebWorks, Inc. was served a summons by the Third Judicial District Court inDecember 28, 2016 all assets and for Salt Lake County, State of Utah.  The plaintiffs, Allen Stutelberg, Harold Schmunk and Michael Greer, filed a derivative action alleging Pacific WebWorks, Inc. and five former and current members of the board of directors, officers and/or employeesliabilities of the Company committed corporate waste, breached fiduciary duties and committed civil conspiracy resultingwere transferred to the Liquidating Trust. The Company has recognized the cessation of its business operations in mismanagementaccordance with Accounting Standards Codification (ASC) 205-20, Discontinued Operations. As such, the historical results of the Company’s assets and affairs and usurpation of corporate opportunities.  The plaintiffs seek general and punitive damages in excess of $300,000 for eachCompany have been classified as discontinued operations.

Results of the five causes of action to be proven at a jury trial.  The Company retained legal counsel to vigorously defend against these allegations.  The Company’s counsel filed an answer todiscontinued operations for the summonsthree and filed a motion to disqualify plaintiff’s attorney due to a conflict of interest.  The Company’s motion to disqualify plaintiff’s attorney was granted in July 2014.  In October 2014six months ended June 30, 2016 are as follows:

Cash flow from discontinued operations for the Company filed a motion to disqualify the remainder of the law firmsix months ended June 30, 2016 are as follows:

7

PACIFIC WEBWORKS, INC. & SUBSIDIARIES

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

 (Unaudited)

NOTE 5 – LITIGATION MATTERS (CONTINUED)

representing the plaintiffs in this matter. On March 12, 2015, the Court denied this motion.  The Company subsequently filed for interlocutory appeal and on April 30, 2015, the Utah Court of Appeals denied this petition.

We are involved in various other disputes and claims arising in the normal course of our business.  In the opinion of management, any resulting litigation from these disputes and claims will not have a material effect on our financial position and results of operations.

NOTE 6 – SEGMENT REPORTING

^aAmounts include all intercompany receivables, payables, revenues and expenses prior to elimination

for consolidation.

^aAmounts include all intercompany receivables, payables, revenues and expenses prior to elimination

for consolidation.

8

NOTE 5 – EQUITY

On June 19, 2017 the Company amended its Articles of Incorporation to increase its authorized common shares from 50,000,000 to 150,000,000.  

On June 20, 2017 control was purchased from the bankruptcy trustee for $25,000 and the Company issued 100,000,000 shares of its common stock to its President.  No proceeds were received by the Company for the issuance of shares, therefore the shares were valued at par value.

PACIFIC WEBWORKS, INC. & SUBSIDIARIES

Notes to the Consolidated Financial Statements

September 30, 2015 and 2014

 (Unaudited)NOTE 6 – SUBSEQUENT EVENTS

NOTE 7 – SUBSEQUENT EVENTSOn November 1, 2017 the Bankruptcy Court for the District of Utah issued a final decree ending the bankruptcy case filed by the Company in February 2016. The Company had been separated from this case on December 28, 2016 when all assets and liabilities were transferred to a liquidating trust.

The Company has evaluated subsequent events in accordance with the provisions of ASC 855 and has identified that there are no reportableadditional subsequent events.events that require disclosure.

9

In this report references to “Pacific WebWorks,” “we,” “us,” “our” and “the Company” refer to Pacific WebWorks, Inc. and its subsidiaries.

FORWARD LOOKING STATEMENTS

The U. S. Securities and Exchange Commission (“SEC”) encourages reporting companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions.  This report contains these types of statements.  Words such as “may,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements.  You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report.  All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

ITEM 2.   MANAGEMENT’S

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion and analysis is intended to help you understand our financial condition and results of operations for the quarter ended June 30, 2017. You should read the following discussion and analysis together with our audited financial statements for the year ended December 31, 2016 and the notes to the financial statements included in this report on Form 10-Q. You should understand that we are no longer in the internet business, the software business, or any business. Thus our future financial condition and results of operations will have no relationship to our historical financial condition and results of operations described below.  

Forward-Looking Statements

The discussion contained herein contains "forward-looking statements" that involve risk and uncertainties. These statements may be identified by the use of terminology such as "believes," "expects," "may," "should" or anticipates" or expressing this terminology negatively or similar expressions or by discussions of strategy. The cautionary statements made in this Form 10-Q should be read as being applicable to all related forward-looking statements wherever they appear in this Form 10-Q. Our actual results could differ materially from those discussed in this report.

Executive Overview

The Company was incorporated in the state of Nevada on May 18, 1987, as Asphalt Associates, Inc. and changed its name to Pacific WebWorks, enjoyed dramatic growth during 2009Inc. in January 1999.   During the years from 1999 to 2016 Pacific WebWorks, Inc. was an application service provider and this growth was related largely to the upgrading of our marketing channelssoftware development firm that developed business software technologies and the migration of our marketing towards a greater emphasis on the viability of our software products as a revenue generating tool, including the ability to use our tools in connection with the major retail sites.  However, due to legal matters that the Company encountered in 2010, 2011services for business merchants and 2012, Management determined that it was prudent to stop marketing the Company’s products while the legal matters were addressed.  This resulted in a significant decline in our revenues.  Consistent with that reduction in revenues, management took steps to reduce our overhead expense.  organizations using Internet and other technologies.

During the nine month period ended September 30, 2015On February 23, 2016 the Company primarily focused our operations on marketingfiled a voluntary petition for bankruptcy in the Company’s Internet technology productsU.S. Bankruptcy Court for the District of Utah, and service.  As announced,soon afterwards ceased its business activities. On August 19, 2016 the Company has developed alternative means to market our Visual WebTools™ product while atproposed a Plan of Liquidation and on November 28, 2016 the same time expanding its Internet technology suiteCourt entered an order confirming the Plan of Liquidation and establishing a Liquidating Trust. On December 28, 2016 all remaining assets and liabilities of the Company were transferred to the Liquidating Trust. As a result of these transfers the Company became, and remains as of the date of this filing, an international frameworkempty shell company, with no assets and no liabilities, except for marketing its products.advances from our sole officer and director.

OverThe information presented below with regard to the last few years we trimmed our staffing significantly and identified and hiredquarter ended June 30, 2016 should be read as historic information on the personnel necessary to address our legal and reporting issues and move the business forward.  OneCompany. As a result of our goals has been to find synergistic opportunities that help to diversify the Company’s operations.  We formed Headlamp Ventures, LLC and activated World Commerce Network, LLC and funded these subsidiaries for the purpose of seeking out investment opportunities in other businesses.  As of September 30, 2015,its bankruptcy, the Company directly or through our subsidiaries, has invested an aggregate of $712,780 in other businesses and has been issued an aggregate of $3,450,000 in notes receivable by other businesses, $3,050,000 of which has been repaid as of September 30, 2015 (See “Liquiditythe date of this filing is an empty shell with no liquidity, no capital resources, and Capital Resources,” below).no operations other than the search for a merger candidate.

Competition throughout the Internet software industry continues to intensify.  In particular, competition for the small office/home office business is intensifying with greater attention being directed to this market from a larger variety of product and service providers using new and more aggressive means to market to this industry.  We believe Pacific WebWorks has great potential in the marketplace, but we constantly need more capital and greater processing resources.  We also have the challenge of identifying and effectively implementing our products into new product distribution channels, responding to economic changes generally, continuing to gain marketplace acceptance and we must address shifting public appetites for technology products.  These challenges could pose a threat to our success.  

10

Liquidity andAnd Capital Resources

We have relied primarily on revenuesAs of June 30, 2017 we had no assets and loans to fund operations for the past two years.  We expect to generate positive cash flows through further developmentwe had no liabilities; we had an accumulated deficit of our business$18,119,429. As of December 31, 2016 we also had no assets and distribution channelsno liabilities; we had an accumulated deficit of $18,119,429. As of June 30, 2016 we had assets of $207,195 and investments in other businesses.  We plan to address only the liabilities of our operating subsidiaries with our current cash balances$192,058 and cash inflows.  Of course cash outflows can exceed monthly cash inflows based on timing differences between marketing campaignsan accumulated deficit of $18,104,292. All assets held at June 30, 2016 were subsequently liquidated per order of the bankruptcy court and sales and returns on investment.all liabilities were paid through a liquidating trust, also per order of the bankruptcy court.

Maintaining sufficient merchant account processing capabilities will continue to be a factor in our overall performance as an Internet application service provider.  We work diligently with our existing merchant account providers and continually search for new merchant account providers in order to manage this risk.  On occasion we encounter a situation where we have a backlog of billing that cannot be processed until sufficient merchant processing is obtained.  The Company currently has $1,887,343 in overdue billing that is on hold until we secure additional merchant processing.  We expect to obtain merchant processing that will enable us to bring the Company’s billing current in the next 30 to 90 days.

If we are able to maintain sufficient merchant account processing capabilities, then we believe that we will be able to sustain our operations with existing cash and assets and future cash flows during the next twelve to twenty-four months and possibly beyond.  Should we need to raise money in the future we believe funding may be obtained through additional debt arrangements in addition to our internally generated cash flows.  However, if we are unable to obtain additional funds on acceptable terms, then we might be forced to delay or abandon some or all of our product development, marketing or business plans, and growth could be slowed, which may result in declines in our operating results and common stock market price.  

Commitments and Contingencies

Current Liabilities:  Our total current liabilities at September 30, 2015 included accounts payable and accrued liabilities.  Accounts payable of $57,155 were related to operating costs such as marketing and advertising expenses and professional fees.  Our accrued liabilities of $704,086 were primarily the result of payroll related liabilities, a disputed payable from the past, and accrued merchant fees, offset by estimated refunds and receivables.

Also included in current liabilities at September 30, 2015 is $500,735 in deferred revenue primarily related to hosting services.

On June 13, 2013, the Company entered into a lease agreement for commercial office space.  The lease runs through May 31, 2018 and provides for monthly payments of $4,300 in year one, $4,425 in year two, $4,550 in year three, $4,700 in year four and $4,825 in year five.  A security deposit in the amount of $4,825 was required upon lease execution.

On September 2, 2014 the Company entered into a $44,281 financing agreement for payment of its business insurance.  The financing agreement carries a 5.24% annual rate of interest and requires the Company to make 9 monthly payments of $5,028. During the three month period ended September 30, 2015, the Company made principal payments of $0 and interest of $0.  For the nine month period ended September 30, 2015, the Company made principal payments of $24,601 and interest of $540. The note had been paid in full by June 30, 2015.

On August 26, 2015 the Company entered into a $77,411 financing agreement for payment of its business insurance.  The financing agreement carries a 5.65% annual rate of interest and requires the Company to make 11 monthly payments of $7,237. During the three month period ended September 30, 2015, the Company made principal payments of $7,037 and interest of $200.  For the nine month period ended September 30, 2015, the Company made principal payments of $7,037 and interest of $200.

11

Results of Operations

The following discussions are based on the consolidated financial statements of Pacific WebWorksWe had no revenues and its subsidiaries forno expenses in the three and nine month periodssix months ended SeptemberJune 30, 20152017. Our only activity during the period was the filing of an amendment to our Articles of Incorporation increasing the number of authorized common shares from 50,000,000 to 150,000,000 and 2014.the issuance of 100,000,000 shares of

our common stock. No proceeds were received by the Company for the issuance of shares, therefore the shares were valued at par value.

In the three months ended June 30, 2016we had gross revenues of $41,679, cost of sales of $17,504, operating expenses of $127,729, a net loss from operations of $103,554, and total other income of $157,702. In the six months ended June 30, 2016 we had gross revenues of $188,212, cost of sales of $69,821, operating expenses of $411,477, a net loss from operations of $293,087, and total other income of $149,717. The following charts areCompany had filed a summaryvoluntary petition for bankruptcy in February of 2016 and these revenues and expenses reflect the Company’s wind down to liquidation. Our decrease in revenues and liabilities to $0 at June 30, 2017 reflects the liquidation of all assets and payment of all liabilities per the court ordered Plan of Liquidation. All remaining assets and liabilities were transferred from the Company to a liquidating trust on December 28, 2016. We will, in all likelihood, sustain operating expenses without corresponding revenues, as we return the Company to current in its reporting obligations and as we commence the search for a business combination with a company with ongoing business activities. We will depend upon our sole officer and director to make loans to the Company to meet any costs that may occur. All such advances will be interest-free loans or equity contributions.

Going Concern

The accompanying financial statements for those periods and should be read in conjunction withare presented on a going concern basis. The company's financial condition raises substantial doubt about the financial statements, and notes thereto, included in this report at Part I, Item 1, above.

Total assets increased at September 30, 2015 as comparedCompany's ability to December 31, 2014 primarilycontinue as a result of increased receivables.  At September 30, 2015 total liabilities increased compared to the 2014 year end primarily as a result of accrued merchant fees and deferred revenue. Our accumulated deficit increased at September 30, 2015 as a result of posting net loss for the nine month period ended September 30, 2015.

We receive revenue for hosting, gateway, and maintenance fees, software access and licensing fees and product sales. Revenues from up-front fees are deferred and recognized over the period in which services are performed, ranging from one month to one year.  Fees for the set-up of merchant accounts are deferred and recognized as services are completed (which is generally two months).  Revenues from monthly hosting, maintenance, transaction and processing fees are recorded when earned.  Operating lease revenues for merchant accounts and software are recorded when earned.  Revenues for product sales are recorded when order fulfillment is complete.

Our net revenues decreased for the 2015 nine month period and for the three month period ending September, 30 2015 compared to the 2014 interim periods as a result of the Company curtailing the marketing expense for its Internet technology products and service.going concern. The Company has focusedno cash and no other material assets and it has no operations or revenues from operations. It is relying on expandingadvances from its infrastructureofficer and technology suite and management believes that continued focus on the Company’s technology business can result in revenue increases.

Cost of sales includes costs relateddirector to fulfillment, marketing, merchant fees, certain royalties and commissions, and amortization of purchased customer portfolios.  Cost of sales as a percentage of net revenues increased to 82.39% of net revenues for the 2015 third quarter as compared to 80.76% of net revenues for the 2014 third quarter and decreased to 64.84% of net revenues for the 2015 nine month period compared to 74.34% of net revenues for the 2014 nine month period.  The increase in the 2015 third quarter was due to a reduction in revenues.  The decrease in the 2015 nine month period was due to fewer commissions paid directly related to new customer acquisition.  Management anticipates that cost of sales will increase as a percentage of sales as the Company pays commissions for new customer acquisitions and merchant fees to process sales.

General and administrative expenses include personnel expenses for executive, finance, and internal support personnel.  In addition, general and administrative expenses include fees for bad debt costs, professional legal and accounting services, insurance, office space and utilities, banking fees, internet fees and other overhead-related costs.  General and administrative expenses decreased for the 2015 third quarter compared to the 2014 third quarter due to a reduction chargeback expenses, but increased for the 2015 nine month period compared to the 2014 nine month period due to an increase in chargebackmeet its limited operating expenses.

Total operating expenses decreased for the 2015 third quarter compared to the 2014 third quarter due to a reduction in selling expenses and general and administrative expenses, but increased for the 2015 nine month period compared to the 2014 nine month period primarily due to the increase in general and administrative expenses.

Total other income decreased for the 2015 interim periods compared to the 2014 interim periods due to a decrease in interest income.

As a result of the above changes in our operations, we recorded a net loss for the 2015 third quarter and 2015 nine month period and net income for the 2014 third quarter and a net loss for the 2014 nine month period.

Off-balanceOff-Balance Sheet Arrangements

We havedo not entered intohave any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be consideredthat is material to investors.

Critical Accounting PoliciesITEM 4.     CONTROLS AND PROCEDURES

The preparation

Evaluation Of Disclosure Controls And Procedures

Our sole officer and director has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as of the end of the period covered by this Quarterly Report on Form 10-Q.  Based on such evaluation, our Chief Executive Officer / Chief Financial Officer has concluded that, as of such date, our disclosure controls and procedures were not effective for the same reasons that our internal controls over financial statementsreporting were not adequate.

Internal Control Over Financial Reporting

As indicated in conformityour Form 10-K for the year ended December 31, 2016 our Chief Executive Officer / Chief Financial Officer concluded that our internal control over financial reporting was not effective during the 2016 fiscal year at the reasonable assurance level, as a result of a material weakness primarily related to a lack of a sufficient number of personnel with appropriate training and experience in accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the amounts reportedor GAAP. We are currently in the consolidated financial statements and accompanying notes.  Estimatesprocess of particular significance in our financial statements include trade receivables and collections, goodwill, contingent liabilities, and valuing stock option compensation.

13evaluating the steps necessary to remediate this material weakness.

Trade receivables and collections - We apply a range of collection techniques to manage delinquent accounts. Management reviews accounts receivable monthly and records an estimate of receivables determined to be uncollectible due to allowance for doubtful accounts and bad debt.  Accounts receivable and the corresponding allowance for doubtful accounts are reviewed for collectability by management quarterly and uncollectible accounts receivable are written off.

Revenue Recognition - The Company recognizes revenue in accordance with the Securities and Exchange Commission, Staff Accounting Bulletin (SAB) No. 101, “Revenue Recognition in Financial Statements” and its revisions in SAB No. 104.  SAB 101 and 104 clarify application of generally accepted accounting principles related to revenue transactions.

We receive revenue for hosting, gateway, and maintenance fees, software access and licensing fees and product sales. Revenues from up-front fees are deferred and recognized over the period in which services are performed, ranging from one month to one year.  Fees for the set-up of merchant accounts are deferred and recognized as services are completed (which is generally two months).  Revenues from monthly hosting, maintenance, transaction and processing fees are recorded when earned. Operating lease revenues for merchant accounts and software are recorded when earned.  Revenues for product sales are recorded when order fulfillment is complete.

The Company recognizes revenues when all of the following criteria are met: (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has occurred, (3) the fee is fixed or determinable and (4) collectibility is reasonably assured.

Goodwill - Goodwill related to Intellipay is assessed annually for impairment by comparing the fair value of Intellipay to its carrying amount, including goodwill.  In testing for a potential impairment of goodwill, the estimated fair value of Intellipay is compared with book value, including goodwill.  If the estimated fair value exceeds book value, goodwill is considered not to be impaired and no additional steps are necessary.  If, however, the fair value of Intellipay is less than book value, then an impairment loss is recognized equal to the excess of book value to estimated fair value. The impairment test for 2014 resulted in an estimated fair value in excess of the book value of goodwill and no impairment was required.

The estimate of implied fair value of goodwill may require independent valuations of certain internally generated and unrecognized intangible assets such as our paying monthly gateway portfolio, software and technology and trademarks.  If the carrying amount of our goodwill exceeds the implied fair value of that goodwill, an impairment loss would be recognized in an amount equal to the excess.  The fair value of Intellipay is estimated using both cash flow information from internal budgets and multiples of revenue.  In the event that an impairment indicator arises prior to our annual impairment test of goodwill, we will provide a full test relative to the indicator in the period that the indicator is present.  

Contingent liabilities - Material estimates for contingent liabilities include approximately $0 for our operating companies.  From a liquidity standpoint, any settlement or judgment received by the Company from pending or threatened litigation may have a direct effect on our cash balances at September 30, 2015.  Management believes that all amounts estimated and recorded as contingent liabilities approximate the amount of liabilities that could be owed to parties in the form of settlement or in a judgment.  Any settlements that might occur below amounts accrued would result in a favorable impact to our earnings and working capital.

Fair Value Measurements - We adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) as of January 1, 2008 for financial instruments measured at fair value on a recurring basis.  ASC Topic 820 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.  Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  ASC Topic 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to

14

unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  These tiers include:

·

Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

·

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

·

Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Fair Value of Other Financial Instruments - The carrying amounts of our accounts receivable, accounts payable and accrued liabilities approximate their fair values due to their immediate or short-term maturities.  The aggregate carrying amount of the notes payable approximates fair value as the individual notes bear interest at market interest rates and there hasn’t been a significant change in our operations and risk profile.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

ITEM 4.  CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed with the SEC pursuant to the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC.  This information is accumulated and communicated to our management to allow timely decisions regarding required disclosure.  Our Chief Executive Officer, who is also our Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report.  Based on that evaluation, he concluded that our disclosure controls and procedures were effective for the quarter ended September 30, 2015.

Changes toin Internal Control overOver Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting

(as defined in Rule 13a-15(f) under the Exchange Act).  Management conducted an evaluation of the effectiveness of our internal control over financial reporting and determined that there wereThere was no changes madechange in our internal control over financial reporting that occurred during the quarterquarterly period ended SeptemberJune 30, 20152017 that havehas materially affected, or areis reasonably likely to materially affect, our internal control over financial reporting.

15

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.

PART II –- OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On September 6, 2013, our subsidiary, Headlamp Ventures, LLC, filed a complaint against Marc Didier in the Third District Court Salt Lake County State of Utah.  The complaint alleges that Headlamp Ventures loaned Grupo Zapata Arce (“Zapata”) $400,000 and Mr. Didier guaranteed the Loan Agreement and Note.  Zapata failed to repay the loan by the due date of August 31, 2013 and is in default.  Pursuant to the Guaranty and Security Agreement, Mr. Didier is obligated for all amounts due and owing.  Headlamp Ventures seeks repayment of the loan amount, plus interest, attorneys’ fees and punitive damages. In June, 2015, the Company filed a motion for Summary Judgment and on July 14, 2015, the Court granted that motion in the amount of $546,798.  The judgment bears interest at a rate of 15% per annum until paid in full. On August 4, 2015, Mr. Didier filed a Chapter 7 Bankruptcy case.

On November 15, 2013 Pacific WebWorks, Inc. was served a summons by the Third Judicial District Court in and for Salt Lake County, State of Utah.  The plaintiffs, Allen Stutelberg, Harold Schmunk and Michael Greer, filed a derivative action alleging Pacific WebWorks, Inc. and five former and current members of the board of directors, officers and/or employees of the Company committed corporate waste, breached fiduciary duties and committed civil conspiracy resulting in mismanagement of the Company’s assets and affairs and usurpation of corporate opportunities.  The plaintiffs seek general and punitive damages in excess of $300,000 for each of the five causes of action to be proven at a jury trial.  The Company retained legal counsel to vigorously defend against these allegations.  The Company’s counsel filed an answer to the summons and filed a motion to disqualify plaintiff’s attorney due to a conflict of interest.  The Company’s motion to disqualify plaintiff’s attorney was granted in July 2014.  In October 2014 the Company filed a motion to disqualify the remainder of the law firm representing the plaintiffs in this matter. On March 12, 2015, the Court denied this motion.  The Company subsequently filed for interlocutory appeal and on April 30, 2015, the Utah Court of Appeals denied this petition.

We are involved in various other disputes and claims arising in the normal course of our business.  In the opinion of management, any resulting litigation from these disputes and claims will not have a material effect on our financial position and results of operations.

None.

ITEM 1A. RISK FACTORS

Factors Affecting Future PerformanceThere have been no material changes to the risks to our business from those described in our Form 10-K as filed with the SEC on December 7, 2017.

We may experience difficulty maintaining sufficient credit card processing capabilities to keep up with our transaction volume.ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We rely upon our credit card merchant accountsOn June 20, 2017 the Company issued 100,000,000 shares of its common stock to collect our monthly hosting paymentsits President.  No proceeds were received by the Company for the issuance of shares, therefore the shares were valued at par value.  There were no other unregistered sales of equity securities during the period covered by this report on Form 10-Q.  

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. REMOVED AND RESERVED

ITEM 5. OTHER INFORMATION

None.

ITEM 6. - EXHIBITS

No.

Description

---

-----------

31

Certification of Chief Executive Officer and manyChief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) of the limitations imposed upon us bySecurities Exchange Act of 1934, as adopted pursuant to Section 302 of the credit card associations, inSarbanes-Oxley Act of 2002

32

Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the opinionSarbanes-Oxley Act of management, are unreasonable and unnecessarily confining.  In the past, these merchant account limitations have forced management to restrict our business growth and this restriction of growth continues to impact our earnings in a negative manner.  On occasion we encounter a situation where we have a backlog of billing that cannot be processed until sufficient merchant processing is obtained.  2002

101

The Company currently has $1,887,343 in overdue billing that is on hold until we secure additional merchant processing.  We expect to obtain merchant processing that will enable us to bringfollowing materials from the Company’s billing currentQuarterly Report on Form 10-Q for

the quarter ended June 30, 2017, formatted in XBRL (eXtensible Business Reporting Language); (i) Balance Sheets at June 30, 2017 and December 31, 2016, (ii) Statement of Operations for the nextthree months and six months ended June 30, 2017 and 2016, (iii) Statement of Cash Flows for the six months ended June 30, 2017 and 2016, and (iv) Notes to 90 days.Financial Statements.

We may pursue investments in, or acquisitions of, complementary service product lines, technologies or business opportunity through our subsidiaries which may interfere with our operations and negatively affect our financial position.

16

We intend to expand our services and product offerings and anticipate evaluating potential acquisitions of or investments in businesses, services, products, or technologies.  These investments or acquisitions may result in the incurrence of debt and contingent liabilities, goodwill impairment charges and amortization of expenses related to other intangible assets.  In addition, acquisitions and investments involve numerous risks, including difficulties in the assimilation of the operations, technologies, services, and products of acquired companies; the diversion of management’s attention from other business concerns; risks of entering markets in which we have no or limited direct prior experience; and, the potential loss of key employees of an acquired company.  As of the date of this filing, other than those items detailed herein, we have no present commitment or agreement with respect to any material acquisition of other businesses, services, products, or technologies.

We cannot be assured that the subsidiaries will be able to identify only business opportunities which will ultimately prove to be beneficial to the Company and our stockholders.  

Our subsidiaries’ search for business opportunities to invest in and this search will not be limited to any particular geographical area or industry.  Our subsidiaries’ management has unrestricted discretion in seeking a business opportunity, subject to the availability of such opportunities, economic conditions and other factors.  Business opportunity participation is governed by the parent company management and board of directors.  In addition, the selection of a business opportunity in which to participate is complex and extremely risky and will be made by the subsidiary’s management in the exercise of its business judgment.  We cannot be assured that the subsidiaries will be able to identify only business opportunities which will ultimately prove to be beneficial to the Company and our stockholders.  

Our expansion into international markets exposes our business to risks related to those economies which may result in loss of revenues.

We are selling our technology in the international markets and as a result, our future revenues may be affected by the economies of these countries.  Our international operations are subject to a number of risks, such as, longer payment cycles, unexpected changes in regulatory environments, potentially adverse recessionary environments and economies outside the United States, and possible political and economic instability.  

We must update our products and services and may experience increased costs and delays which could reduce operating profit.

The electronic commerce, web hosting and merchant processing markets in which we compete are characterized by technological change, new product introductions, evolving industry standards and changing customer needs.  In order to remain competitive, we may be required to engage in a number of research and development projects, which carries the risks associated with any research and development effort, including cost overruns, delays in delivery and performance problems.  Any delay in the delivery of new products or services could render them less desirable by our customers, or possibly even obsolete.  Any performance problem with a new product or service may require significant funds to correct the problem.  As a result of these factors, our research and development efforts could result in increased costs that could reduce our operating profit, a loss of revenue if promised new products are not timely delivered to our customers, or a loss of revenue or possible claims for damages if new products and services do not perform as anticipated.

We are dependent upon license renewal which cannot be assured to occur.

We derive revenues from user licenses and license renewals on a month-to-month arrangement.  We also intend to increase the brand recognition of our products among users through these types of relationships.  If a substantial number of our customers were to decline to renew their contracts for any reason, then we could experience a substantial drop in revenues. Our success in establishing our products as a recognized brand name and achieving their acceptance in the market will depend in part on our ability to continually engineer and deliver new product technologies and superior customer service, so that customers renew their licenses month to month.

17

We may need additional external capital and may be unable to raise it.

Our success will depend upon our ability to generate future cash flows and, if needed in the future, the ability to access equity capital markets and borrow on terms that are financially advantageous to us.  Also, we may not be able to obtain additional funds on acceptable terms.  If we are unable to obtain additional capital, then we may not have sufficient working capital to develop products, finance acquisitions, or pursue business opportunities.  If we borrow funds, then we could be forced to use a large portion of our cash reserves to repay principal and interest on those funds.  If we issue our securities for capital, then the interests of investors and shareholders could be diluted.

We are subject to intense competition from large and small companies that limits our ability to obtain market share and may force our prices down.

We face competition in the overall Internet software market, as well as in the business opportunity market.  Our ability to earn significant revenues from our Visual WebTools™ or IntelliPay payment system will depend in part on their acceptance by a substantial number of online businesses.  Broad acceptance of our products and services and their use in large numbers is critical to our success because a large portion of our revenues are derived from one-time and recurring fees we charge to customers buying our products and services.  Our success in obtaining market share will depend upon our ability to build name brand recognition and to provide cost-effective products and services to our customers.  We have developed our products to meet the needs of small businesses and we believe the generality of our competitors’ services may be inadequately addressing the small business owner’s needs. We expect competition to persist, increase, and intensify in the future as the markets for our products and services continue to develop and as additional competitors enter our market.  In addition, many of our current or potential competitors have broad distribution channels that they may use to bundle competing products directly to end-users or purchasers.  If these competitors were to bundle competing products for their customers, it could adversely affect our ability to obtain market share and may force our prices down.

We may be unable to achieve market acceptance because technological standards for payment processing are not established.

One obstacle to widespread market acceptance for the IntelliPay payment system is that widely adopted technological standards for accepting and processing payments over the Internet have not yet emerged.  As a result, merchants and financial institutions have been slow to select which service to use.  Until one or more dominant standards emerge, we must design, develop, test, introduce and support new services to meet changing customer needs and respond to other technological developments.  To be successful, we must obtain widespread acceptance of our technologies, or modify our products and services to meet whatever industry standards do ultimately develop. It is not certain that we will be able to do either.

We depend upon our proprietary rights, none of which can be completely safeguarded against infringement.

Our ability to compete effectively will depend, in part, upon our ability to protect our proprietary source codes for Visual WebTools™ and the IntelliPay payment system through a combination of licenses and trade secrets.  These agreements and procedures may not effectively prevent disclosure of our confidential information and may not provide us with an adequate remedy in the event of unauthorized disclosure of such information.  Intellectual property rights, by their nature, are uncertain and involve complex legal and factual questions.  We rely upon trade secrets with respect to our source code and functionalities and other unpatented proprietary information in our product development activities.  We seek to protect trade secrets and proprietary knowledge in part through confidentiality agreements with our employees, resellers, and collaborators.

If employees or collaborators develop products independently that may be applicable to our products under development, disputes may arise about ownership of proprietary rights to those products or services.  Protracted and costly litigation could be necessary to enforce and determine the scope of our proprietary rights and it would be impossible to predict whether litigation might be successful.

18

We rely in part on third party technology licenses which we cannot guarantee will be available to us in the future.

We rely on certain technology which we license from third parties, including software which is integrated with internally developed software and used in our software to perform key functions.  Our inability to maintain any of these technology licenses could result in delays in distribution of our services or increased costs of our products and services.  We cannot be assured that third party technology licenses will continue to be available to us on commercially reasonable terms, or at all.

We may experience software defects which may damage customer relations.

Despite rigorous testing, our software may nevertheless contain undetected bugs, errors or experience failures when introduced, or when the volume of services provided increases.  Any material errors could damage the reputation of our service or software, as well as damage our customer relations. We have detected errors, defects, and bugs in the past and have corrected them as quickly as possible.  Correcting any defects or bugs we may discover in the future may require us to make significant expenditures of capital and other resources.  We believe that we follow industry-standard practices relating to the identification and resolution of errors, defects, or bugs encountered in the development of new software and in the enhancement of existing features in our products.  As of the date of this filing we have not experienced any material adverse effect by reason of an error, defect, or bug.

We may experience breakdowns in our hosting services, infrastructure or payment processing systems, which may expose us to liabilities and cause customers to abandon our products and services.

We would be unable to deliver our payment processing services or hosting services if our system infrastructures break down or are otherwise interrupted.  Events that could cause system interruptions are:

*

fire

*

earthquake,

*

power loss,

*

terrorist attacks,

*

harmful software programs,

*

telecommunications failure, and

*

unauthorized entry or other events.

Although we regularly back up data from operations, and take other measures to protect against loss of data, there is still some risk of such losses.  Despite the security measures we maintain, our infrastructure may be vulnerable to computer viruses, hackers, rouge employees or similar sources of disruption.  Any problem of this nature could result in significant liability to customers or financial institutions and also may deter potential customers from using our services.  We attempt to limit this sort of liability through back-up systems, contractual provisions, insurance and other security measures.  However, we cannot be assured that these contractual limitations on liability would be enforceable, or that our insurance coverage would be adequate to cover any liabilities we might sustain.

Also, a breach of our e-commerce security measures could reduce demand for our services.  The e-commerce industry is intensely focused on the need for Internet security, particularly with respect to the transmission and storage of confidential personal and financial data.  Any compromise or elimination of our security could erode customer confidence in our systems and could result in lower demand for our services or possible litigation.

We may not be able to adapt as the Internet market changes, including changing marketing strategies and the associated risks.

Our failure to respond in a timely manner to changing market conditions or client requirements could have a material adverse effect on our business, prospects, financial condition, and results of operations.  The Internet is characterized by:

*

rapid technological change;

*

changes in advertiser and user requirements and preferences;

19

21

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrantRegistrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

22